Home Politics ANDREW NEIL: If you think your taxes are high under the Conservatives… wait until Labour gets in

ANDREW NEIL: If you think your taxes are high under the Conservatives… wait until Labour gets in

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If you think your taxes are high under a Tory government, just wait until Labor comes in, writes ANDREW NEIL.

If you think your taxes are high under the Tories, wait until Labor comes in, writes ANDREW NEIL

Britain’s tax burden is at its highest level in seven decades, but politicians of all stripes want to tax us even more.

Far from an intelligent debate about how we might keep a little more of what we earn, political discourse is dominated by louder voices demanding the right to appropriate an even larger portion of our hard-earned money.

Even conservatives have stopped advocating for more limited government and lower taxes. Yes, ministers periodically raise the prospect of future tax cuts, but the more they talk (vaguely) about it, the faster taxes rise. It reminds me of that delightful quote from Ralph Waldo Emerson: “The louder I spoke of his honor, the faster we counted our spoons.”

While the Conservatives talk about cutting taxes, check your spoons: They’re presiding over one of the largest tax hauls in our modern history. The tax on corporate profits has been increased from 19 percent to 25 percent, a slap in the face to those who thought the goal of Brexit was to create a dynamic, low-tax competitor to the European Union.

Windfall taxes have been imposed on energy companies, bringing their total tax rate to 75 percent, forcing Harbor Energy (the largest independent operator in the North Sea) to lay off hundreds of workers and TotalEnergies to cut back. investments in the North Sea. So much for increasing the security of our oil and gas supplies.

Above all, the freezing of thresholds means that income tax will have risen by a whopping £25 billion a year by 2028, with basic rate taxpayers paying more than £500 a year more and basic rate taxpayers highest, over £1,000. He remembers that when Chancellor Jeremy Hunt follows a 1p income tax cut in his Autumn Statement, it will be a paltry offset for all the extra tax he is currently paying.

The Conservatives have been so adept at raising taxes that you wonder what taxes they could let Labor rise. But one thing we can be sure of: however high taxes have risen under the Conservative government, they will rise even higher under the Labor government.

Until now, Keir Starmer’s party has been timid – some might say dishonest – about the taxes it would raise, concentrating on those that do not affect the majority of taxpayers but stick to the left’s traditional hate targets : private equity, private schools, owners, non-owners, energy companies and the like.

But taxing Labour’s usual suspects will pay for only a fraction of the excessive spending Labor will embark on if it wins the next election.

So far, Keir Starmer's party has been coy (some would say dishonest) about the taxes it would raise.

So far, Keir Starmer’s party has been coy (some might say dishonest) about the taxes it would raise.

The party has promised £28bn a year for so-called “green” investments (on top of existing public investment plans), £8bn for a National Wealth Fund, a UK Energy Bank (which will undoubtedly waste billions) and, although he has been vague about his intentions, almost certainly billions more for schools, hospitals, social care and various social benefits. After all, what is a Labor government for if not all that?

It cannot do any of this without breaking its self-imposed fiscal rules, which limit how much it would borrow, even if it is for investment, and force it to reduce the national debt (as a proportion of GDP). Then taxes would have to increase. But what tax increases could cover all this spending?

It is certainly not the end of tax privileges for non-dominants, foreigners who work and live in Britain and pay tax on their UK income but not on their overseas income (unless they remit it to the UK ).

At most this would generate an extra £3.5bn and even that assumes no one would move to friendlier tax climates, which is unlikely. The successive tightening of the non-dom tax regime has already seen their numbers fall from 135,000 15 years ago to less than 75,000 now.

There may be arguments for ending non-dom status in the interests of justice, but it is not a lucrative way to raise revenue. In the long term, it could even lead to a net loss for the Treasury, depending on how many leave.

Imposing a 20 per cent VAT on private schools would raise even less – around £1.6bn. Once again, a total based on the dubious assumption that no parent would take their children out of these schools and transfer them to public schools.

Indeed, many of those already feeling the squeeze when it comes to school fees are forced to turn to the state sector, reducing VAT revenue from private schools and increasing the cost of state education.

Again, some will see this as a justified tax raid on the rich. But its revenue-raising potential is negligible, not only because the sector is so small but, according to a Mail report last November, it could well shrink and an estimated 200 schools would be forced to close as a result.

It is clear that Labor spending will have to be funded by massive, as yet unspecified tax rises, and while all promises will be transparent with a properly costed programme, it is unlikely that much will be specified this side of the election. So prepare for some tax bomb surprises if Labor wins.

Just five years ago, the Party’s astute shadow chancellor, Rachel Reeves, published a pamphlet proposing new property and land taxes, a new gift tax (to raise more than the current inheritance tax ) and a much higher level of capital gains tax.

When Chancellor Jeremy Hunt follows a 1p cut to income tax in his autumn statement, it will be a paltry offset for all the extra tax he is currently paying.

When Chancellor Jeremy Hunt follows a 1p cut to income tax in his autumn statement, it will be a paltry offset for all the extra tax he is currently paying.

These are the kind of tax rises that would produce at least some of the billions Labor needs to fund its spending. But since then we have heard little about this topic.

The most recent pamphlet published by Reeves was 11,000 words, but only two paragraphs were dedicated to taxes and told us nothing. I wonder why. The idea that his plans for big tax increases are no longer on the agenda is a thing of the past.

The British left has always tried to claim that it can pay for all its expensive plans by raising taxes only on the rich. Of course, given the huge sums required, things never work out that way: everyone ends up paying more taxes.

Scandinavian social democrats are much more honest: if you want massive state provision of high-quality social services and welfare from cradle to grave, taxes have to be high across the board. Sweden’s basic tax rate is 32 per cent, rising to 52 per cent above £45,000.

More from Andrew Neil, Daily Mail…

These are tough times for tax cutters, and they’re not going to get any easier. Major forces on the right (Donald Trump, Boris Johnson) joined forces with the left (Joe Biden, Keir Starmer) to make the case for big government. The pandemic and the war in Ukraine gave it new impetus. All the pressure, from both the left and the right, is to increase public spending.

An aging population requires more money for pensions and health and social care (on average, 85 percent of our demands for health services occur in the last five years of our lives). The war in Ukraine requires greater defense spending.

And the cult of “net zero” is being used by top politicians across the political spectrum as cover for massive increases in state spending and interference.

Socialist Scotland gives a glimpse of the future. Since Holyrood was established, the number of people paying the top rate of income tax has increased by 70 per cent. That marginal rate (42 per cent) is higher than in England (40 per cent), but the SNP-Greens coalition is considering a further increase of two percentage points.

High earners already face a marginal rate of almost 50 percent. As a result, 12 per cent of Scottish adults pay 65 per cent of the income tax collected. If we push them any harder, they might vote with their feet.

The Scottish lesson for England is clear: big government, in the end, always results in big taxes. This is true all over the world.

Of course, there is an alternative. Liz Truss’s interregnum showed that you can’t borrow to get tax cuts (and the Labor Party will soon realize that it is at the limit of borrowing to spend). What would work requires a lot of hard work, for which there is little appetite.

A radical overhaul of the NHS – currently a voracious, underperforming money pit – would revolutionize efficiency and introduce new sources of non-state revenue.

A huge welfare program would encourage and cajole some of the five million who are unemployed – and not looking for work – to return to the workforce, saving taxpayers money and increasing growth.

But traditional politicians on the right and left are too intimidated by established opinion and vested interests to promote such ideas. Dare to touch the NHS and you will be accused of “privatising” it. Encouraging people to return to work is considered “ruthless.” So the arguments for more limited government and lower taxes are out of the question.

“We need five years in the Opposition to recharge our batteries,” a senior Conservative told me this week, evidencing the fatalism now gripping his party. “You need more than a recharge,” I responded. ‘Their batteries are dead and obsolete. “A completely new energy system needs to be built.”

—And that will take more than five years? she asked. I nodded. He smiled weakly and changed the subject.

Get ready for big government (and big taxes), whoever wins the next election.

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